Regional banking giant acquires strategic stake in Dubai-based HBG Holdings

NCBC is a subsidiary of The National Commercial Bank (NCB) of Saudi Arabia, one of the largest and most powerful financial institutions in the Middle East.

Under the terms of the deal which was signed in Bahrain and Dubai, the shareholding is to be acquired through Oryx Regional Private Equity Fund (Oryx), a fund managed by NCBC. As a result of this transaction, Oryx will become one of the largest shareholders in the HBG management company and act as anchor investor in its US$200 million pan-regional private equity fund. Oryx will also be represented on the Board of Directors and Executive Committee of HBG.

Commenting on the deal, Abdallah Y. Al-Mouallimi, Chairman of the Board of Directors of HBG Holdings said, "This deal forms a partnership between the region's most experienced private equity practitioners on the one hand and its most powerful financial institution on the other. This is definitely a strong alliance in the making and we are excited by the momentum the deal will lend to our ambitious growth plans."

In 2006 HBG appointed external consultants to formulate a strategic plan for expanding its private equity business, and as a result of its findings, the HBG team started working towards a strategic institutional partnership to bring together the private equity expertise of HBG with the financial muscle and distribution capability of a major financial institution.

Al-Mouallimi added, "We held joint venture discussions with various institutions but there was always the highest level of comfort and cultural compatibility with NCB. In addition our respective institutions are both committed to long-term investing which is central to our investment strategy."

Initial discussions between HBG and NCB, which began in late 2006, were successful and led to extensive and wide ranging negotiations leading to more detailed legal and commercial due diligence.

The transaction team and due diligence activities were led by HBG Managing Director, Zulfi Hydari who commented, "We have worked very closely with NCB over the last twelve months to structure and close this deal. This deal aligns us with the strongest financial institution in the region at a time of rapid growth in private equity in the Gulf and more specifically in the Kingdom of Saudi Arabic."

The deal reinforces a growing trend of involvement by large scale financial institutions in Middle Eastern private equity either through wholly owned subsidiaries or in partnership with leading independent players.

This partnership positions HBG as a leader in private equity and allows it to look at a wider range of transactions in the region with a partner that can provide investment banking and corporate finance support as well as access to a powerful distribution network.

HBG is currently evaluating a number of deals in the region in consumer, logistics, financial services and infrastructure and expects to invest over $2bn during its next investment cycle.